Question 1

The opportunity cost of any decision is the forgone value of the next best alternative that is not chosen.

Accepted Answer

A) True 
 B)False

Question 2

Scarcity of resources implies that people must make decisions consistent with the means they have available to them.

Accepted Answer

A) True 
 B)False

Question 3

The term "satisficing" indicates an optimal choice.

Accepted Answer

A) True 
 B)False

Question 4

How are the slope of a production possibilities frontier and the opportunity cost of the goods related?

Accepted Answer

A) The slope is a graphical representation of the cost of expanding production of both goods. 
B) The slope is a graphical measure of the growth rate of the economy. 
C) The slope is a graphical representation of the cost of decreasing unemployment. 
D) The slope is a graphical representation of the rate of trade-off between the goods. 
E) The slope is a graphical representation of the cost of economic growth in the economy. 
A) The slope is a graphical representation of the cost of expanding production of both goods. 
B) The slope is a graphical measure of the growth rate of the economy. 
C) The slope is a graphical representation of the cost of decreasing unemployment. 
D) The slope is a graphical representation of the rate of trade-off between the goods. 
E) The slope is a graphical representation of the cost of economic growth in the economy.

Question 5

Money costs and opportunity costs are concepts that are

Accepted Answer

A) not related in any meaningful way. 
B) used by tax accountants. 
C) related through the relative prices of goods and services. 
D) used by economists to learn the most efficient level of output. 
A) not related in any meaningful way. 
B) used by tax accountants. 
C) related through the relative prices of goods and services. 
D) used by economists to learn the most efficient level of output.

Question 6

The total amount of consumption of a society can be increased if

Accepted Answer

A) firms allow each worker to perform multiple tasks. 
B) resources are allocated by a central planning group. 
C) individuals engage in specialization and voluntary trade. 
D) barter exchange is used in place of money. 
A) firms allow each worker to perform multiple tasks. 
B) resources are allocated by a central planning group. 
C) individuals engage in specialization and voluntary trade. 
D) barter exchange is used in place of money.

Question 7

If the production possibilities curve is a straight line,

Accepted Answer

A) opportunity costs rise as output of either commodity is expanded. 
B) resources are not equally productive in the production of both goods. 
C) opportunity costs are negative. 
D) resources can be moved from the production of one good to production of others with no loss of productivity. 
A) opportunity costs rise as output of either commodity is expanded. 
B) resources are not equally productive in the production of both goods. 
C) opportunity costs are negative. 
D) resources can be moved from the production of one good to production of others with no loss of productivity.

Question 8

If production involves constant opportunity cost, the production possibilities frontier

Accepted Answer

A) is "bowed inward." 
B) is a straight line. 
C) is "bowed outward." 
D) is a wavy line. 
E) has an unpredictable shape. 
A) is "bowed inward." 
B) is a straight line. 
C) is "bowed outward." 
D) is a wavy line. 
E) has an unpredictable shape.

Question 9

Adam Smith and David Ricardo worked together to develop the law of comparative advantage.

Accepted Answer

A) True 
 B)False

Question 10

Ted got a ticket to this year's Super Bowl and paid the face value of $1,000. His cousin offered him $3,000 for the ticket. Given this information, Ted's opportunity cost of this ticket is

Accepted Answer

A) $1,000. 
B) $2,000. 
C) $3,000. 
D) $4,000. 
A) $1,000. 
B) $2,000. 
C) $3,000. 
D) $4,000.

Question 11

Efficient production can be carried out anywhere on or below the production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 12

Economists use the term capital to describe that factor of production that includes human-made resources such as factories, buildings, machinery, and tools.

Accepted Answer

A) True 
 B)False

Question 13

If the budget deficit was eliminated, the federal government would have more money than it could spend.

Accepted Answer

A) True 
 B)False

Question 14

Why is it inefficient for an economy to be inside the production possibilities frontier?

Accepted Answer

It is inefficient because the society ha

Question 15

Which of the following is an example of opportunity cost not measured by money cost?

Accepted Answer

A) The time spent eating a business lunch at a restaurant 
B) The time spent preparing a meal eaten at home 
C) The time spent studying to obtain an "A" in economics 
D) The time spent repairing a car in one's own garage 
E) All of the responses are correct. 
A) The time spent eating a business lunch at a restaurant 
B) The time spent preparing a meal eaten at home 
C) The time spent studying to obtain an "A" in economics 
D) The time spent repairing a car in one's own garage 
E) All of the responses are correct.

Question 16

Because resources tend to be specialized, if a society chooses to increase production of military goods, this tends to

Accepted Answer

A) result in a decrease in the opportunity cost of more military goods. 
B) result in an increase in the opportunity cost of more nonmilitary goods. 
C) result in an increase in the opportunity cost of more military goods. 
D) change the position of the production possibilities curve. 
E) alter the slope of the production possibilities curve. 
A) result in a decrease in the opportunity cost of more military goods. 
B) result in an increase in the opportunity cost of more nonmilitary goods. 
C) result in an increase in the opportunity cost of more military goods. 
D) change the position of the production possibilities curve. 
E) alter the slope of the production possibilities curve.

Question 17

Which of the following ideas of Adam Smith has religious overtones?

Accepted Answer

A) Comparative advantage 
B) Aggregate demand 
C) Perfect competition 
D) Rational expectations 
E) Invisible hand 
A) Comparative advantage 
B) Aggregate demand 
C) Perfect competition 
D) Rational expectations 
E) Invisible hand

Question 18

If it is not possible to increase the output of one good without decreasing the output of the other, when there are only two goods, then

Accepted Answer

A) this situation would describe a point on a production possibilities frontier for the producer. 
B) the outcome can be described as efficient. 
C) there is no unemployment of resources. 
D) All of these outcomes are correct. 
A) this situation would describe a point on a production possibilities frontier for the producer. 
B) the outcome can be described as efficient. 
C) there is no unemployment of resources. 
D) All of these outcomes are correct.

Question 19

Which of the following is a listing of the types or categories of resources?

Accepted Answer

A) Land, labor, and capital 
B) Land, labor, and education 
C) Land, labor, and efficiency 
D) Land, labor, and markets 
E) Land, labor, and inputs 
A) Land, labor, and capital 
B) Land, labor, and education 
C) Land, labor, and efficiency 
D) Land, labor, and markets 
E) Land, labor, and inputs

Question 20

Economics only applies to

Accepted Answer

A) decision making by households. 
B) decision making by governments. 
C) decision making by business firms. 
D) all of these kinds of decisions. 
A) decision making by households. 
B) decision making by governments. 
C) decision making by business firms. 
D) all of these kinds of decisions.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

The opportunity cost of any decision is the forgone value of the next best alternative that is not chosen.

Scarcity of resources implies that people must make decisions consistent with the means they have available to them.

The term "satisficing" indicates an optimal choice.

How are the slope of a production possibilities frontier and the opportunity cost of the goods related?

Money costs and opportunity costs are concepts that are

The total amount of consumption of a society can be increased if

If the production possibilities curve is a straight line,

If production involves constant opportunity cost, the production possibilities frontier

Adam Smith and David Ricardo worked together to develop the law of comparative advantage.

Ted got a ticket to this year's Super Bowl and paid the face value of $1,000. His cousin offered him $3,000 for the ticket. Given this information, Ted's opportunity cost of this ticket is

Efficient production can be carried out anywhere on or below the production possibilities frontier.

Economists use the term capital to describe that factor of production that includes human-made resources such as factories, buildings, machinery, and tools.

If the budget deficit was eliminated, the federal government would have more money than it could spend.

Why is it inefficient for an economy to be inside the production possibilities frontier?

Which of the following is an example of opportunity cost not measured by money cost?

Because resources tend to be specialized, if a society chooses to increase production of military goods, this tends to

Which of the following ideas of Adam Smith has religious overtones?

If it is not possible to increase the output of one good without decreasing the output of the other, when there are only two goods, then

Which of the following is a listing of the types or categories of resources?

Economics only applies to

What Is Economics

The Economy: Myth and Reality

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters